The so-called single supervisory mechanism will be based in Frankfurt and will recruit about 1,000 staffers.

It is due to be operational late next year after assessing European banks’ balance sheets through a stress test that will identify possible capital shortfalls.

If the supervisor finds a bank needs help, a rescue authority would step in to unwind it or rescue ailing lenders by using money from a common fund. The ministers were still far from reaching an agreement on how to design and fund the rescue authority.

Germany and other countries that have paid the bulk of Europe’s bailouts have concerns about the institution’s legal basis and fear their taxpayers will be stuck with bills to clean up banks in Europe’s weaker economies.